The Reserve Bank has today released its semi-annual financial stability review outlining the threat posed by housing to the system. The RBA has concerns about a build up in risks in the property market, but says the system has been made safer by tighter lending standards and $18 billion of new equity capital raised by the nation's largest lenders this year, including $3.5 billion raised by Westpac this week. The additional capital is necessary because banks are facing an environment of heightened risk in their portfolios, the RBA said, but the big banks still have a lot more work to do to match new liquidity rules that will come into effect in 2018 and require banks to issue longer term debt to match the profile of long-term home loans. The RBA document singled out property development in Sydney and Melbourne saying there are a "few tentative signs that sentiment may be turning" in these housing markets, the RBA said, one of several signs "that the banking system was better placed to manage the risk environment" than it was a year ago. The RBA said the "permanent" tightening of standards was important because "nominal housing price growth might be slower on average and periods of absolute price declines to be more common – now that the transition to a low inflation, higher-debt state has been completed".